When I started Make Smarter Decisions this spring, I took time to write some goals for both the blog and myself. One personal goal was to make sure I took long walks most summer mornings. So a 6-mile loop to the lake and back is how I have started many days!

During my walks, I usually listen to NPR or catch the most recent podcasts of my favorite personal finance bloggers. But last week, I ended up listening to the radio for about an hour during a walk.

I noticed the station played an ad for a car dealership a number of times (in different variations) during that hour and it bothered me more each time I heard it. I even remembered a lot of the phrases that were used in the sales pitch.

When I got home, I jotted a few down to try to see what draws people in. There were no melodies or jingles to catch your attention either. I don’t know much about advertising but I noticed a pattern of about five words at a time. Do any of these sound familiar?

You deserve a new car

Get the car you want

Come tell us your story

Don’t think about the banks

Got bad credit? Don’t worry

Our lenders listen to you

We’ll pay off that loan

Bring us your beater car

Four thousand off select cars

You’ll drive away in style

Luxury cars you can afford

You work hard – now enjoy

Your safety matters to us

Trade-in values at record levels

More comfort at lower prices

(And my husband’s 6-word favorite – Buy a car – get a cruise)

I’m sure you recognize some of that “play list”. The words are personal and tie to feelings and finances – exactly what peak’s your interest. But if people buy-in to those words and feelings, they can make bad decisions that can have a terrible impact on their lives and futures.

But the endorphins start flowing and people start thinking they can get $4,000 off a luxury car that they can afford, have worked for and deserve! The dealer will give them a great trade-in price and pay off the loan on their worn-out car, while keeping them safe and comfortable in the brand new car they want. Their credit won’t even matter because all they have to do is tell their story!

And even if they understand this isn’t the real deal (they somehow don’t listen to the little voice inside their head saying “if it sounds too good to be true, it probably is”) – off to the dealership they go. Maybe just to check things out.

But sadly – other nice, hard-working people go because they actually believe what they are hearing. And they go to buy. (Quick side note – Tenants we have had who struggled to pay the rent on time always drove cars that were nicer than ours. And they often paid the car payment before they would pay us. We now look very carefully at car payments as part of the overall rental application.)

Again – these are very nice people with decent jobs, who have cars that then limit their housing choices.

But wait – what about the annoying flurry of disclosures at the end of commercial? You know – the ones that seem to be on fast forward – or that switch to sounding like something you’d hear in Alvin & the Chipmunks? Why do people ignore them?

If you’ve listened to any prescription medication ads on TV – you know the scary important part comes at the end.

Let’s look at this list of things that can get crammed in the last few seconds of a car ad:

Read all terms and conditions

Many offers cannot be combined

All lending subject to approval

Factory rebates may not apply

Higher down payments sometimes required

Trade-in determined by vehicle condition

Negative equity can be refinanced

(And the hubby’s 12-word favorite – Cost of the cruise is financed into the price of the car)

So did you catch yourself saying those faster in your head and in a squeaky voice? Thought so… Clearly this part of the ad is difficult to understand because of the rate of speech. It’s the “fine print” of a radio ad.

But also look at the differences in language between the two sets of phrases.

Get the car you want vs. Negative equity can be refinanced

Everyone understands the first one, yet many have no idea what the second phrase really means. And they likely they have no idea what signing this paperwork can do to their finances.

*Remember – many of these people go to the dealerships looking for deals not from a lack of listening, but from a lack of understanding. And you probably know someone this could happen to (or already did happen to).

But stop and think about this – Would you consider that person to be reasonable? At least at times?? When I was a young college grad, I think it could easily have happened to me and I think I was pretty reasonable.

My guess is that most dealerships that use ads like this get them from large agencies that are very careful to follow the “truth-in-advertising” rules to make sure their ads cannot be considered deceptive.

And in doing some research on the topic, I did find that the Federal Trade Commission (FTC) has guidelines it follows that consider an ad from the point of view of a “reasonable consumer.”

If challenged, the FTC considers things such as the ad in context (words, phrases) and what it conveys to consumers. They also look at information that might be missing from the ad and how it affects the consumer.

But here is a warning directly from the FTC website about illegal practices:

But the Federal Trade Commission, the nation’s consumer protection agency, says beware: Not all dealers play by the rules. Details about special offers and promotions may be buried in the fine print, clicks away from online claims, may not be disclosed at all, or may not be disclosed until you get to the showroom or the finance office. But the law requires that if a dealer advertises discounts, prices, or special low payments, the ads must clearly explain the important details of the offers and how a buyer may qualify for them.

There are certainly dealerships that use these ads just to get more people looking at cars. And there are also many salespeople who do an excellent job of explaining all of the financing options and considerations. We are not talking about them here.

So who determines the definition of reasonable in terms of the consumer? Is it reasonable to put the most important details on fast forward in terms that many don’t really understand? Just what does negative equity can be refinanced mean to some (reasonable) people? And how does it get explained to them if they don’t understand?

Maybe it’s my background as a teacher, but I think there are many people out there who really need help understanding those kinds of phrases.

You owe more money on your original loan than your old car is worth (even with trading it in). And you are going to have to continue to pay for that difference along with the new loan you are taking out.

And they need examples – with the prices and the math, so that when they sign on the dotted line – they know what they have agreed to. (Maybe dealers are required to give them examples – like the tiny disclosure calculations on credit card statements that people don’t seem to read or understand?)

The FTC website has great information about dealing with negative automobile equity (and examples!) – but does anyone direct them there? Buying a car and financing it isn’t the same as financing a TV or computer.

Your car will likely be repossessed if you can’t pay for it and probably not the electronics. So not only will your credit get ruined – you won’t be able to get to work either!

This is about the scale of the purchase and the damage these types of bad decisions can do.

Cars are not as expensive as houses, but car payments can take a big chunk of a person’s income if they are not careful. And many forget that there are insurance increases that come with newer and financed cars (along with all the fees, taxes, registration costs, etc.)

So why is it so easy to go in and get a big car loan? Or maybe it isn’t that easy? (They certainly make it sound easy!) You can’t go in and get a house loan very easy these days.

And does anyone ever challenge the “reasonableness” of the ads anyway? It’s hard to believe that the crazy fast endings of those radio ads is really all that reasonable.

Or maybe I just need to make sure I stay tuned to NPR and podcasts in the morning and quit worrying about everyone who makes bad decisions…

But this one just doesn’t sit right with me at all. (And neither does prescription medication being advertised on TV – but I don’t want my husband to even see me type that. He gets furious when he sees those…)

So whose responsibility is it to deal with the situation – the buyer’s? The dealership’s? The finance companies? The government? Do you know someone who has made a bad decision like this? How did it affect their finances? Did you think of other 5 word phrases I missed (you’ll be listening for them now – sorry about that!)

Disclaimer

Note: Ideas and opinions on MakeSmarterDecisions.com are simply the results of my own experiences, and they are not intended to advise or offend. MakeSmarterDecisions.com should be viewed and shared for educational and entertainment purposes only. My posts are based on my personal experiences, and all readers should consider consulting a professional or specialist in a given area (financial, retirement, real estate, etc.) before making any decisions.
See full disclosures under the Home Tab.